Paul Hastings is advising Chinese state-owned heavy machinery maker Shandong Heavy Industry Group on its purchase of a stake in German forklift maker Kion Group for $927.6 million.
 
The deal, which is expected to close in the fourth quarter, is the largest-ever direct investment by a Chinese business in Germany, according to a joint statement from the companies.
 
Weichai Power Co. Ltd., the auto equipment unit of industrial manufacturer Shandong Heavy, will buy a 25 percent stake in Kion for $587 million and spend another $340.6 million for a 70 percent piece of the company’s hydraulics division. The purchase will take place through a capital increase, with Kion owners Goldman Sachs and Kohlberg Kravis Roberts & Co. maintaining their majority position.
 
Goldman and KKR first bought Kion from German industrial-gas maker Linde for around $5 billion in 2006 with medium-term plans for an initial public offering, according to Reuters. An IPO was slated for 2009 but never materialized. The cash from Weichai Power will help to bolster Kion’s financial position ahead of a large round of debt refinancing next year, sources told Reuters.
 
Kion is the world’s number-two maker of industrial trucks, behind Toyota Industries Corp., and Weichai Power plans to leverage that position to extend its operational footprint, chairman Tan Xuguang said in the statement.
 
“This partnership is an important step in our five-year strategy to globalize and expand our business activities into new markets and products,” he said.
 
Paul Hastings Frankfurt partners Christopher Wolff, Regina Engelstäder, Ali Sahin, Jan Gernoth, Jochen Scheel, and Karl Balz worked on the deal.  Hengeler Mueller also advised Weichai Power, with partners Wolfgang Meyer-Sparenberg, Christian Moller, Maximilian Schiessl, Alf-Henrik Bischke and Wolfgang Kellenter based in Dusseldorf and Christian Hoefs in Frankfurt taking the lead. King & Wood Mallesons partners Xu Ping and Mark Schaub worked together with Hengeler Mueller, according to a statement from the German firm.* 
 
Freshfields Bruckhaus Deringer partners Stephan Eilers and Norbert Schneider advised Kion Group on the tax aspects of the deal. A spokesman for Kion Group declined to name the company’s other advisors. 
 
*Updated, 9/4/12: The original version of this story was updated to include additional advising firms Hengeler Mueller, King & Wood Mallesons and Freshfields on the deal.